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The question of whether artificial intelligence (AI) can bridge the widening racial disparity homeownership gap or if it could make it worse is the subject of the new research paper “Harnessing AI for Equity in Mortgage Finance,” created in collaboration of Federal Home Loan Bank of San Francisco and the Urban Institute,

The new report includes the input of nearly 50 individuals involved in federal government, financial technology, mortgage lending, consumer advocacy, and research organizations. Among the findings was the uneven adoption of AI across the mortgage finance industry, with larger mortgage lenders, fintech firms, and government-sponsored enterprises already implementing the technology into their operations while smaller and mission-oriented lenders, such as minority depository institutions and community development financial institutions, have significantly lower adoption levels.

Based on their findings in the mortgage finance ecosystem, the report’s authors put forth specific recommendations on how AI can do more harm than good: they called for increased regulatory guidance to establish clear guidelines on applications and protect the rights of consumers, the design of AI models to ensure algorithms are free of bias and centered on equity, and the launch of pilot programs test models in order to guarantee their results were consistent and supported equity in homeownership.

“AI and the potential disruption in its wake have been the subject of many conversations, and this latest paper underlines the importance of getting ahead of the technology and harnessing it to advance equitable outcomes in our society,” said Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute. “We cannot afford to wait and see how stakeholders will implement AI in their processes; we should act now to establish guidelines and guardrails to ensure that Black and Latino households are supported in their pursuit of homeownership.”